Ntrepreneurial Leader Profiling Boeing Company free essay sample

Semester 1/ 2011 Assignment 2 – Group Project on entrepreneurial leader profiling Slogan Forever New Frontiers Executive Summary ? This business report is about the entrepreneurial leader William E. Boeing and The Boeing Company. There is a description of The Boeing Company and its performance on the aircraft business. Then comes the analysis of William E. Boeing as an entrepreneur and a leader. The report demonstrates why he was labelled as a visionary leader and an entrepreneur, due to his personal, technical and conceptual skills. William Boeing’s democratic style is described as well as the theories that can be applied to him, which is the achievement-oriented category. After, follows the entrepreneurial process in which each step reinforces the entrepreneurial and visionary leadership of William Boeing. The steps analysed are the presence of opportunity, opportunity identification, decision for opportunity exploitation, resource acquisition and entrepreneurial strategy. The report continues with the major company issues, such as the big competition with Airbus, the future entrance of a new competitor from China and the trends of the market. Finally ensue recommendations and conclusions that could be summarized in the word â€Å"innovation†. This means that the company needs to innovate continuously to maintain its success. Boeings should innovate in the design, efficiency, performance, and sustainability of its products as a way to maintain its leadership and continue with William E. Boeing legacy. ? 1? Table of content Executive Summary 1? Table of content .. .. 2? 1. Introduction 3? 2. Company information.. 3? 3. Leader information 5? 4. Entrepreneurial Process . 7? 5. Major Company Issues and Recommendations .. 9? 6. Conclusion. 11? References .. 12? ? 2? 1. Introduction This business report will analyse the entrepreneurial leader William E. Boeing and the company that he developed in the aircraft business, The Boeing Company. The first part will cover the information of The Boeing Company. The information will be structure starting with the description of The Boeing Company background and a brief history of it, then the products that Boeing has developed in the market and will close with the organisational structure of the company. The second part of this research will focus on the entrepreneur leader, William E. Boeing. The position of the leader within the company will be analysed, including his personal characteristics. William Boeing will be described regarding his personal skills and his style of management. The analyses will include some Avery’s (2004) theories that were observed and applied by William Boeing. The third part of this report will include the analysis of the entrepreneurial process model of William Boeing and the company. The model applied is based on Morris, Kuratko Schindehutte (2001) entrepreneurial process that ncludes: presence of opportunity, opportunity identification, decision for opportunity exploitation, resource acquisition and entrepreneurial strategy. The fourth Part is regarding the major issues of the company applied within the knowledge of entrepreneurial leadership and incorporates our recommendations. And at last, the business report finishes with the conclusion. 2. Company information Company background: Boeing Company is one of the largest aerospace and aircraft manufacturers in the world. William E. Boeing created the company in July 15, 1916. At this time, the company was called B W . Shortly after, its name became Pacific Aero Products and finally Boeing Airplane Company. After the purchase of two major aircraft companies such as Rockwell International for $3. 2 billion in 1996 and McDonnell Douglas, for $ 13 billion in August 1997, Boeing became the world leader in the defence sector in 2008. Boeing employs nowadays more than 159,000 people across the United States and 70 countries. Its headquarters are located in Chicago, Illinois. Boeing is specialized in the design of aircrafts, military aviation, helicopters as well as satellites and rockets through its ? 3? ivision, Boeing Integrated Defence Systems. Boeing is the world largest aircraft manufacturer and the third largest aerospace and defence corporation by revenue. Boeing is the biggest exporter by value in the United States. This company is engaged in a trade war with its main competitor, the European consortium Airbus. Boeing Products Boeing’s products include commercial and military aircraft such as: the 737, 747 (which was the largest passenger plane until the Airbus A380), 767 and 777 families of airplanes and the Boeing Business Jet; the F/A-18 Hornet used by the United States Navy. Furthermore the products range is big, from services that contain weapons, electronic and defence systems, satellites, advanced information and communication systems, launch systems, and performance-based logistics and training. Organisational structure/design: Boeings activities are structured around two core businesses. The first is the civil aviation division called Boeing Commercial Airplanes and space, defence and security. The second is related to defence, called Boeing Defence, Space Security. Both entities are supported by Boeing Capital Corporation (BCC), a global provider of financing solutions; the Shared Services Group (SSG) which offers a wide range of services to Boeing worldwide, and Boeing Engineering, Operations Technology (WE T), which participates in the development, acquisition, application and protection of processes and innovative technologies. Boeing Commercial Airplanes (BCA): Boeing has been a leading passenger aircraft manufacturer for more than 40 years. Boeing Commercial Airplanes division is working on the development of new aircraft models as well as the modernization of existing models. Both in close collaboration with airlines and analysing passengers’ demands. These are the basis of the success of Boeing Commercial Airplanes and strengthen the companys position as market leader in commercial aviation. Boeing Defence, Space Security (BDS): Boeing Defence, Space Security provides widespread services for large-scale complex systems. These systems combine ambitious communication networks with air, land, sea and space-based platforms for military, government and private customers around the world. ? 4? 3. Leader information It was 1916 when William E. Boeing with U. S. Navy Lieutenant G. Conrad Westervelt developed the first Boeing plane, the seaplane/biplane BW Model 1, and therefore started the company in the aircraft industry (The Boeing Company, n. d. ). William E. Boeing was the company founder, owner, president and Chairman of the Board. He was part of The Boeing Company until 1934, when he resigned as a chairman and sold his stocks. He went back to the company as a consultant and technical advisor during World War II (â€Å"Business Heroes: William Boeing†, 2006). Now, For 2010 The Boeing Company had revenues for $64,3 billion dollar (The Boeing Company, n. d. ). There are different things that were said about William E. Boeing. That he was a perfectionist, a visionary, an innovative, a risk-taker, a proactive as well as a stickler to the facts (The Boeing Company, n. d. ) (D’intino, Boyles, Neck Hall, 2008). Therefore, William Boeing have the three underlying attributes of entrepreneurs; innovativeness, risk-taking and proactiveness (Covin Slevin, 1991). He was fascinated by planes, and therefore really believed in the aircraft industry business and in the company success. It is important to point out that William Boeing even used his personal resources to rescue the company went it was in financial problems. Therefore, we could also say that he was a very committed person. He was a visionary leader. After World War I, he told to his cousin Edward C. Gott that they should dedicate themselves to developed machines that should be used in peacetime, confirming his visionary leadership. He also had interest in innovation. Under his management was built a biplane with steel, which demonstrates his entrepreneurial risktaking, challenge for innovation and advancing performance and plane design (D’intino, Boyles, Neck Hall, 2008), even though he was in the timberland business. Regarding his source of power, literature show us that it came from his expertise (Avery, 2004), due to his knowledge in aircraft design, manufacture and performance. However, due to his perfectionism and high quality standards, we could say that he had some degree of coerciveness. An example that illustrates Boeings’ perfectionism and coerciveness is when he was visiting his airplane building shop; Boeing saw some features bad sewed, so he walked ? 5? over until he broke them all, and said â€Å"I, for one, will close up shop rather than send out work of this kind (The Boeing Company, n. d. ). We could identify his decision making style mainly as a Consensus style (Avery, 2004). When he started to build the first plane, he did it with Westervelt and used another aircraft as a guide. However, William E. Boeing took the final decisions. Regarding the entrepreneurial side of William E. Boeing, he is the perfect example of the personal entrepreneurial skill: discipline, risk-taker, innovative, change oriented, persistent, visionary leader and self-driven (Yim, 2011). William E. Boeing had discipline in manufacture airplanes. He encouraged innovation for developing new design with better performance. He was a risk-taker for developing military prototypes with his own money (D’intino, Boyles, Neck Hall, 2008). He changed the main orientation of the company, from the military development, and started to focus in the commercial part of the business, the passengers’ transportation business. These changes came when he won the Chicago-San Francisco route bid from the Post office (â€Å"Business Heroes: William Boeing†, 2006). He was persistent to continue even when the company had financial problems (D’intino, Boyles, Neck Hall, 2008). As describe above he was a visionary leader. Finally, he was a selfdriven person, because he believed from the beginning that he could build better airplane (â€Å"Business Heroes: William Boeing†, 2006). Regarding the Micro-level leadership theories, William E. Boeing could well be classified in the Trait Theory developed by Kirkpatrick and Locke (1991) because he had the six leader traits: drive, being honest/having integrity, desire to lead, knowing the business, high-level of intelligence and self-confidence. Regarding the Behavioural theories we could indicate that William E. Boeing mainly used a Democratic style of leadership. He involved the people that worked with him, make them participate and encourage feedback. That is why Boeing still has a good reputation for learning from their mistakes and rapidly does changes to improve the quality (D’intino, Boyles, Neck Hall, 2008). However, he was very concern for production and that people should be qualified for the job. We could identify his managerial style mainly focus in task management (Aver, 2004). He believe in facts and details, he said to his managers that many of wrong decision stemmed from a detail overlooked or incorrectly interpretation (The Boeing ? ? Company, n. d. ). Referring to the House’s path-goal theory, we could classify William E. Boeing in the achievement-oriented leader category due to his orientation to the design, development and performance of every new aircraft. 4. Entrepreneurial Process Presence of opportunity Nowadays, due to the fast changes that come from the technology or from the economy, companies should id entify the presence of opportunities. In fact, they must use and turn into their advantage the discovery of new products, new methods of production, new market, etc. Morris, Kuratko Schindehutte, 2001). In 1890, the first flight in the world was of only 50 meters of distance. The human dream of flying became a reality. In 1903, the creation of a more secured plane marked the beginning of modern aviation. Boeing, who was a visionary, showed interest for this new product. However, during this period, people were just expecting a crash for any test of flight. But William Boeing was convinced that there was a definite future in aviation (The Boeing Company, n. d. ). Opportunity identification The best way of identifying opportunities is to have a better knowledge of how to access information about the existence of an opportunity and a better ability to analyse this information. A good entrepreneur should detect and decide the right opportunities for exploitation (Morris, Kuratko Schindehutte, 2001) (Maznevski DiStefano, 2000). Thanks to Boeings social network, such as the founder of Metalplane Co. , an U. S. Navy lieutenant or a pilot, he attended an aviation meeting in 1910 and finally had his first flight experience in 1914. Due to Boeings job in a timber company and a shipyard he had knowledge about the raw material of an aircraft and experiences with the construction of machines. As a result he could identified the weakness of aircrafts giving him an opportunity to build a better plane (The Boeing Company, n. d. ). Decision for opportunity exploitation The decision to exploit an opportunity or not relies on weighing the potential value of the opportunity against the costs of exploiting it, and the comparison to the outcomes of other possible courses of action. Why a person determines to exploit an opportunity will depend on 7? the nature of the opportunity, his personal nature and his personal background (Morris, Kuratko Schindehutte, 2001). Therefore, Boeing completed a course at the Glenn L. Martin School for instruction to increase his knowledge about planes and flying. Furthermore he ordered a plane for his personal use to see how a plane was constructed in reality. He was convinced that there was a future in the aircraft business (The Boeing Company, n. d. ). Resource acquisition This entrepreneurial step requires both financial and non-financial resources. Even though the financial is essential, an entrepreneur must have non-financial resources such as physical, organizational, relational, technological, intellectual and human skills (Morris, Kuratko Schindehutte, 2001). To the death of Boeing’s parents at the age of 20, he inherited approximately one million dollars and lands. These gave him the opportunity to buy the Health Shipyard where he could manufacture the planes. His previous job as entrepreneur in Timber Co. taught him how to structure and manage a company and gave him a useful network in architecture (Gregersen, Morrison Black, 1998). Furthermore, when Boeing needed to test his airplanes, he paid for the construction of a wind tunnel at the University of Washington in exchange of a curriculum in the new science of aeronautics in the university’s establishment (The Boeing Company, n. d. ). Process management Process management is concerned with the identification, design, documentation, implementation, control and improvement of business processes. The objective is the use of any information about the companys processes to arrange to the customers needs and as a result to better achieve the companys goals (Morris, Kuratko Schindehutte, 2001). The work began in designing the first Boeing plane with a group of technical assistants. After a few trial flights with the new plane and monitoring its performance, William E. Boeing wanted to devote the company’s energies toward the development of an improved commercial flying boat (Marquardt, 1998). Boeing believed very much in details and he experienced that many decisions in the construction process needed to be considered with more specifications and have to be interpreted more correctly. As a result the process of constructing a plane was changed, now using a new technology: air-cooled engines, giving Boeing a competitive advantage Ballal, (Dilip Zelina, 2004). ? 8? Entrepreneurial strategy The entrepreneurial strategy provides the guideline of the activity that the entrepreneur has to follow to exploit opportunities. Entrepreneurial strategy faces two major issues: Firstly once the presence of opportunity reveals to competitors, how does the entrepreneur develop a competitive advantage? Secondly how to generate value ith so much uncertainty (Morris, Kuratko Schindehutte, 2001)? The winning of the competition for the Chicago to San Francisco airmail route giving the exclusive control of the airmail in the USA. Another competitive advantage is based on Boeing’s reputation; it has received a special permission to serve champagne during its flights, even though no champagne was allowed at this period, because of prohibition. When he penetrated the new defence m arket, Boeing privileged acquisition such as Mc Donald Douglas in 1997 in order to reduce uncertainty and information asymmetry. The entrepreneurial strategy also involved an efficient flexibility and adaptability during the World War I, with a quick evolution from civil to military aviation (The Boeing Company, n. d. ). 5. Major Company Issues and Recommendations In 2003, Airbus reversed decades of domination of Boeing in the civil aviation market, selling for the first time more aircraft than its competitor. What could explain this change? 700? 600? 500? 400? 300? 200? 100? 0? Boeing? Airbus? ? 9? Nowadays, airline companies and airports required aircrafts with high levels of technology. These requirements respond to environmental, operating costs and capacity transport issues (Vigoureux, 2008). Industry experts now recognize Boeing product quality and technological innovation lower than its French rival Airbus. Some Boeing’s models are now outdated, such as the Boeing 737 which is still using components designed in the 1950s (Gallois, 2007). On an environmental point of view, even though Boeing has significantly reduced the carbon emission and the noise of its planes, the market is still expecting more environmental innovation. Boeing’s strategy is based on the improvement of their previous planes and not to create new nes, just the opposite of Airbus. Therefore, it is hard to respond with aircrafts simultaneously to answer the different trends like the new demand coming from the development of low cost airlines, the quick growth of air transport in Asia and the request of aircrafts that reduce the operating costs. When, Airbus, with the A380, has comm itted to deliver a plane with operating costs lower than 17% compared to the Boeing 747 while having 30% increase of passenger boarding and more, the market is still expecting something new from Boeing (The Airbus Company, n. d. ). To respond to these major issues, Boeing has to continually innovate and maybe develop the first aircraft powered by electricity. It will permit to respond to the environmental requirements as well as reducing the operating cost by decreasing the fuel consumption. Furthermore Boeing’s orders have been increased and due to the current busy production, Boeing is unable to increase the production volume for larger aircraft in the longer term. On the basis of this, a Chinese manufacturer, Commercial Aircraft Corporation of China (Comac), saw an opportunity to build up his own market for aircraft. Therefore, Boeing will face a new competitor in the aviation market when Comac will enter in 2016. Comac will work with existing technology, and leverage low capital and labour costs to bring a product to market that could compete on price with established producers like Boeing. Boeing can face this plan by having better technologies than this new potential competitor. The Chinese manufacturer will be able to build cheaper planes than Boeing because they are highly subsidized by the country. That’s why Boeing should either modernize their planes, or produce new ones with a better technology than this competitor. By using innovations and ? 10? new technologies Boeing planes could be 20 percent more efficient. It impacts airlines to be able to save more costs, for example by saving fuel (Andersen, 2009). Furthermore, Boeing has a production plant in China. They have to be attentive to knowledge spillovers of their Chinese workers. Comac could easily take over Boeing workers by paying them little more loans, which would have a major impact on Comac’s knowledge of production and the gaining of information of the Boeing Company. To respond this issue, Boeing could make use of patenting its innovations and managing its knowledge in order to keep the knowledge in the company (Andersen, 2009). 6. Conclusion The first aircraft was constructed dawn in the 20th century. Due to his visionary leadership, Boeing saw an opportunity to make this a new commercial concept, and therefore make it available to a wider market. Although he had an excellent basis from which to start, it was not only his available funds from his previous businesses that aloud him to exploit this gap in the market and therefore eventually come to dominate it. His practical sense and ability to work with wood, as well as his education in piloting, aided him in the creation of aircrafts that still dominates the market over 5 decades after his death. This benchmark, which has only in recent years been answered by the Airbus Company, is a testament to the label of pioneer in reference to Boeing’s life work. Through his accomplishments Boeing also displayed exemplary leadership skills, which in term allowed him to make his visions a reality. In fact, nearly a hundred years later the Boeing Company is not only the largest exporter of aircraft in the United States but also the largest exporter by value. 11? References ? Andersen, Peder A. (2009). New Civil Aircraft Competitors on the Horizon? (2009). Avery, G. C. (2004). Understanding Leadership. London: SAGE Publications. Ballal, Dilip R. , Zelina, Joseph (2004). Journal of aircraft, 41(1), 43-50. â€Å"Business Heroes: William Boeing† (2006). Business Strategy Review, 17, 1, 36-3 8. DOI: 10. 1111/j. 0955-6419. 2006. 00389. x Comac. (n. d) Competitors. Retrieved Mai, 07. , 2011 from http://agmetalminer. com/2010/02/04/china-has-a-competitor-to-boeing-and-airbus/ Covin, J. G. and Slevin, D. P. (1991). A conceptual model of